DUMPING AND ANTI-DUMPING (Syllabus: GS Paper 3 - Economy)

Context: For long, India was counted to be the top user of anti-dumping duty and often came under attack at the World Trade Organization (WTO).

• But for the last three years, the government has been very selective in imposing the duty even after the Directorate General of Trade Remedies (DGTR) investigations have established that the goods were being "dumped" into India.

Dumping

• When the goods are exported by a country to a foreign country at a price lower than the price it charges in its own home market is called dumping. 
• Under World Trade Organization (WTO) rules, dumping is illegal only if the foreign country can reliably show the negative effects the exporting firm has caused its domestic producers.
• In order to protect domestic producers from dumping, countries use tariffs and quotas.

Anti-dumping

• It is a protectionist tariff, imposed by a domestic government on foreign imports that are at a price lower than the price it normally charges in its own home market.
• Anti-dumping duty is imposed as a remedy to the distortive trade which arises due to the dumping of goods. 
• This tool of fair competition is permitted by the WTO.